Step #2: The Three Most Popular Medigap Plans and How They Work

The #1 reason you need a Medicare Supplement (aka Medigap) is that there’s no out-of-pocket maximum limit to your spending.

My webinar attendees also learned what some other major expenses are, such as skilled nursing.

You can check out that webinar to learn more and see the big picture (including how they compare with Medicare Advantage Plans); but to keep things simple here, we’re just looking at the basic benefits on the chart below.

I’m going to focus on plans F, G and N.

Plan F – The “Cadillac” Plan

Plan F has been the most popular plan for many years, but due to recent legislation, will be closed to new enrollments starting in 2020.

There is a limit to the excess charges allowed, up to 15% over the Medicare-approved amount.

This is called the “limiting charge.”

Summary of the 3 most popular plans

Plan F

Just to recap, Plan F will cover all of your out of pocket expenses on Medicare.

For the most part, you’ll have virtually no copays when you see the doctor. (Prescription drugs are covered separately).

Plan G

Plan G is identical to Plan F except it doesn’t cover the Medicare Part B annual deductible ($166 in 2016).

Plan N

Plan N does not cover the Part B Deductible, and excess charges. (Excess charges are not very common).

Plan N requires a small copay for office visits and ER, after you’ve paid the $166 deductible for the year.

How much is a Medicare Supplement?

First the bad news – it’s not very simple to get fast and easy pricing for Medigap policies.

Most agent websites and insurance company sites will require you to enter information to be contacted.

If there’s a site that allows you to access all the prices and companies in your zip code for free, without entering personal information, let me know! Because I’m not aware of such a thing at this time.

Many State Department of Insurance websites give pricing for Medigap policies, although they are usually annual prices rather than monthly.

The prices vary by zip code, age, and sometimes gender and tobacco usage.

The #1 reason is the value you get from having the total freedom to see any provider that accepts Medicare.

Freedom Rules!

I believe that it’s this freedom that is the single most valuable thing about Original Medicare.

I also think it may be the most overlooked quality in a plan when folks are new to Medicare.

It’s easy to overlook freedom, or to sacrifice this freedom, in favor of a low monthly cost.

Why the choices you make NOW are more important than you think.

Something you won’t hear talked about in the Medicare mailers, and the Medicare Advantage presentations is, when you’re new to Medicare, you have a limited enrollment opportunity to get into a Medigap policy.

What if you miss this enrollment period?

In the 6 months after you first enroll in Medicare Part B, you have guaranteed issue rights to a Medigap policy.

That means you can enroll in any plan letter, no health questions asked.

This is the only way to TRULY assure you’ll have a Medigap policy when you need it most, later in life.

If you wait, and decide later you want to enroll in one, it could be too late.

You can still a apply for a Medigap policy at any age, year round (unless you need to disenroll from a Medicare Advantage Plan), but you will have to answer the health questions beyond that initial 6 months.

More Facts About Medigap Policies

Switching Medigap Policies

Aside from the limited Guaranteed Issue period for Medigap plans, many don’t realize that if you already have one, you can submit an application for a different Medigap Policy any time during the year.

This is a Medigap to Medigap plan switch.

Why would you want to do that?

First, to lower your rate. It IS possible to lower your rate, and even though you will have to answer the health questionnaire, it is not as difficult to qualify as you might think.

Secondly, you may simply want a different Medigap plan letter. Some companies may let you switch to a different plan letter (within the same company) without applying. Or, maybe your company doesn’t offer a Plan G and you’d like to switch to a G to save money and experience lower rate increases down the road.

One of the most misunderstood things about Medigap Policies, especially to those that have been on them for years, is that there are NO doctor networks (and no referrals required to see a specialist).

That means you absolutely, positively do NOT have to check with your doctor to find out if they will accept your new Medigap Plan company.

No matter what the office staff at your doctor’s office tells you, if they accept Medicare, they will accept your Medigap Policy.

I’ve seen this occur time and time again – especially in areas of the country where there are a high number of Medicare Advantage enrollees. Yes, there are still folks working in medical billing offices that do not understand how Medigap plans work.

My mom switched from a Medicare Advantage Plan to a Medigap Plan N, and she is STILL getting billed from one doctor as if she is on a Medicare Advantage Plan. I don’t even know how this is possible.

On a Medigap plan, the claims get submitted to Medicare first. Any doctor or hospital that accepts Medicare will accept your Medigap plan, no matter what company it is.

I have talked to countless folks on expensive plans (paying hundreds and hundreds of dollars more per year than they need to), unwilling to change to a different carrier, because they believe the new company won’t cover everything their existing plan covers.

They are paying hundreds more per year, out of FEAR.

But the truth is, every Medigap plan company MUST cover the exact same benefits by law, because the plans are standardized.

Medicare Advantage Plans change every year – Medigap Plans don’t.

Consider the fact that Medicare Advantage Plans change every year.

There’s no guarantee that the Medicare Advantage plan you choose now will cover the providers you want, at the price you want, down the road.

You may sign up for the plan with the zero premium because they offer everything you want now. But what if that changes?

I bring this up just to clarify to you the real issues at stake.

There’s much more to the equation than just dollar for dollar coverage.

A Medigap Policy is the ONLY way to get total provider freedom, and consistent, predictable coverage for years to come.

Just don’t forget to factor these into the price when you are making comparisons.

Conclusion

We looked at how Medigap policies are often misunderstood, and that they are completely different from Medicare Advantage Plans.

The easiest way to understand these plans is to look at the three most popular plans, and how they work.

We used the chart from Choosing a Medigap Policy to go over what Plan F, Plan G, and Plan N cover, and what the differences are between these plans.

Plan G is a significantly better value than Plan F in most zip codes.

Finally, there’s more to comparing plans than just price.

It’s important to understand what you value most. To some, that is the freedom to see any provider that accepts Medicare.